You’d be surprised how many people get this wrong already.Ī divergence forms on your chart when price makes a higher high, but the indicator you are using makes a lower high. Let’s start with the most obvious question and explore what a divergence really is and what it tells you about price. I do not recommend trading divergences by themselves but they are a good starting point. In my own trading strategy, divergences are a big part for one of my setups and in combination with other signals. Divergences can not only be used by reversal traders but also trend-following traders can use divergences to time their exits. As with all such advisory services, past results are never a guarantee of future results.Divergences are one of my favorite trading concepts because they offer very reliable high-quality trading signals when combined with other trading tools and concepts.Īlthough indicators are somewhat lagging – just like price action is lagging too – when it comes to divergences, this lagging feature is actually going to help us find better and more reliable trade entries as we will see below. EconoTimes expressly disclaims any liability for any lost principal or profits without limitation which may arise directly or indirectly from the use of or reliance on such information. Any news, opinions, research, data, or other information contained within this website is provided as general market commentary and does not constitute investment or trading advice. Past performance is no guarantee of future results and EconoTimes specifically advises clients and prospects to carefully review all claims and representations made by advisors, bloggers, money managers and system vendors before investing any funds or opening an account with any Brokerage. None of the blogs or other sources of information is to be considered as constituting a track record. Clients and prospects are advised to carefully consider the opinions and analysis offered in the blogs or other information sources in the context of the client or prospect's individual analysis and decision making. Disclaimer: EconoTimes provides references and links to selected blogs and other sources of economic and market information as an educational service to its clients and prospects and does not endorse the opinions or recommendations of the blogs or other sources of information.

Daily bullish divergence rsi